Decide now to examine, plan, then execute. Johnson & Johnson, General Electric and Ford began their built to last journey with an existing product. These three companies’ leaders understood that the products were a vehicle for the company. Products as a vehicle for the company makes the company more likely to be built to last. Let’s review how these companies’ leaders began their journey.
Johnson and Johnson (J&J) – all information from J&J Website/Our Story
Robert Wood Johnson started his career as a pharmaceutical apprentice in the family’s pharmacy in 1861.
- 1873 – Co-founded his own company with George Seabury – medicated plasters.
- 1876 – Robert visited the World’s Fair, heard Dr Joseph Lister on antiseptic surgery. This redirected his career.
- 1886 – Robert with his two brothers began J&J, mass produced sterile surgical supplies. The products were sutures, absorbent cotton gauze. Corporate social responsibility was initially practiced.
- 1888 – Products were not enough to impact the industry. The company published Modern Methods of Antiseptic Wound Treatment for doctors. A training publication and sales guide for products.
- 1890 – J&J pioneered employee benefits.
- 1932 – Robert Wood Johnson II, son of founder, as president increased wages, reduced work hours, created new jobs. This was during the great depression.
- 1935 – Robert II believed business more than profits.
- 1943 – Seventy years after starting, J&J published a declaration of its value system, Our Credo, formal statement of corporate social responsibility to consumers, employees, community before its stockholders.
The J&J clock building (focused on the organization) was firmly established, its organization shaped to endure a number of challenges. These will be reviewed in the next blog.
General Electric (GE)
Founders include, Thomas Edison (45); Elihu Thompson (35); Charles Coffin (48). In 1892 the founding of GE started with Edison’s DC System and had to change to Westinghouse’s AC System (Collins p 27).
According to Collin’s research, company’s core ideology is a foundation to a built to last strategy. GE’s core ideology was established early.
- “Improving the quality of life through technology and innovation.
- Interdependent balance between responsibility to customers, employees, society and shareholders.
- Individual responsibility and opportunity.
- Honesty and integrity” (Collins p 69).
Collins’ research of visionary companies (those built to last) invested early and significantly in “new technologies, management methods, innovation industry practices” (Collins p 183).
GE’s leadership through its early development invested in a number of initiatives to ensure the organization was built to last. An example for GE in 1956, “GE published and distributed, Some Classic Contributions to Professional Managing. The purpose was designed to spread powerful management ideas throughout the ranks of GE” (Collins p 194). Secondly, GE instituted a process called “work out.” “Groups of employees meet to discuss opportunities for improvement and make concrete proposals. Upper managers are not allowed to participate in the discussion, but must make on-the-spot decisions about the proposals in front of the whole group – he or she cannot run, hide, evade or procrastinate” (Collins p 188). A core GE value is to promote from within. GE’s history demonstrated this back to 1922. Collins’ research of companies built to last showed this is one consistent value of nearly all 18 companies.
- 1913 – Charles Coffin, first chairman – GE Research Lab (Collins p 28, 29).
- 1922 – Gerald Swope – moved into home appliances, introduced the idea of “enlightened management with balanced responsibilities to employees, shareholders and customers” (Collins p 170).
- 1950 – Ralph Cordiner – restructured, decentralized, initiated management by objective, created management training program (Collins p 170).
- 1964 – Fred Borch – invested in jet aircraft engines and computers (Collins p 170).
It is evident that building a company to last takes time, energy and commitment from multiple leaders. While the core values established the guiding principles, promote from within ensured constant adherence to them. However, the leaders at GE made missteps. These will be highlighted in the next blog. One thing, GE continues to operate for over 130 years.
Ford Motor Company
In 1903, Ford began but not with the Model T. The Model T came after the Models A, B, C, F, K. Ford was one of 502 companies in the US founded between 1900 and 1908 to manufacture autos (Collins p 27). Why did Ford continue and nearly all the others disappear? According to Collins, Ford wove its company into the “fabric of society” with the Model T and later with the Mustang (Collins p 4). Henry Ford’s mechanical interest began at 12 and by 15 developed his first steam engine which led to an apprenticeship (Ford Website).
- 1891 – employed at Edison Illuminating Company, Chief Engineer by 1893. Thomas Edison became a lifelong friend and mentor (Ford Website).
- 1899 – resigned from Edison Illuminating Company and organized the Detroit Automotive Company, 18 months later it filed bankruptcy (Ford Website).
- 1901 – Henry Ford established his second company, Henry Ford Company (Ford Website).
- 1903 – Henry Ford and 12 others established the Ford Motor Company, first sale July 15, 1903 (Ford Website).
- 1907 – Henry Ford stimulated his company with this objective, “to democratize the automobile. To build a motor car for the great multitude. It will be so low price that no man making a good salary will be unable to own one and enjoy with his family the blessing of hours of pleasure in God’s great open spaces…everyone will be able to afford one and everyone will have one” (Collins p 97).
- Up to 1907, there were over 30 companies in the automobile market with no clear leader. Eventually, Ford rose to number one then fell because it achieved its goal and failed to set another (Collins p 97).
- 1914 – Instituted $5 Day, doubled the existing pay, reduced the hours per shift from 9 to 8, employee retention improved, allowed Ford employees to purchase Fords. The 8-hour shift allowed for 3 shifts per day instead of 2. Increased pay, less hours, increased free time, contributed to the beginning of middle class in the US (Ford Website).
- 1916 – Henry Ford, “I don’t believe we should make such an awful profit on our cars. A reasonable profit is right, but not too much. I hold that it is better to sell a large number of cars at a reasonably small profit. I hold this because it enables a larger number of people to buy and enjoy the use of a car and because it gives a larger number of men, employment of good wages. These are two aims I have in life” (Collins pp 52, 53). A label developed from Ford’s statement – the 3 P’s, People, Products, Profit. From 1908 to 1916 Ford lowered prices on the Model T by 58% (Collins p 53). Henry Ford early in the Ford journey demonstrated his clear ideology. This would be revisited later in Ford’s journey at a critical time which will be highlighted in my next blog.
- 1918 – After WWI, Ford hired disabled veterans establishing Ford as one of the first companies to hire disabled veterans and adapt work environments (Ford Website).
- 1930 – Moving Forward outlined Ford’s industrial and social theories, 27 years after the company’s start.
How does your company’s story compare to J&J, GE or Ford? Are the company’s core values documented and available to all? Is your mindset, products or services being a vehicle for the company? This mindset has demonstrated a distinguishing characteristic for built to last companies according to Collins’ research.
The building of a company to last with existing products or services then and now would be different. However, your company if not built to last can be and the starting point is the organization itself, its core values that are unchanging and timeless, and leadership that holds them secure through any circumstances.
The current circumstances that your company possibly experiences could be a challenge. Most of the 18 companies identified in Collins’ Built to Last book detoured from their core values. However, they righted the ship and continued. The next blog will review some of the detours and how the leadership restored the direction of the company.
All the best.